Garga, Vaishali - 2020 - This version: April 2020
(ZLB) on the nominal interest rate. Fiscal stabilization via higher government debt is frequently recommended as a policy … with a debtfinanced fiscal expansion and show that even in a low real interest rate environment, higher debt doesn …’t necessarily raise the real interest rate. The effect of the expansion is non-monotonic: Increasing debt raises the natural real …